Republicans say gas prices will go up 65 cents. Researchers aren’t as sure
AI-generated summary reviewed by our newsroom.
- Republicans warn of a 65-cent gas hike; researchers project smaller increases.
- LCFS changes may raise fuel costs gradually as producers pass on credit expenses.
- A separate 1.6-cent gas tax hike will take effect Tuesday due to inflation indexing.
Controversial changes to fuel regulations, imposed by the California Air Resources Board, will take effect Tuesday. Some state Republican lawmakers are telling consumers to brace for a 65-cent price hike.
Researchers say an increase of that magnitude is unlikely and even less likely to happen all at once, in part because of political uncertainty surrounding the regulation program known as the low-carbon fuel standard.
Senate Minority Leader Brian Jones, R-Santee, has been particularly vocal about the price increase, even creating a Change.org petition after his more traditional efforts to repeal LCFS changes failed.
“Californians already face the highest gas prices in the country. Hard-working families shouldn’t be forced to pay up even more,” Jones said in the description of the petition.
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He has shared that a 65-cent price increase will be taking place July 1 and in a statement said his estimate comes from a University of Pennsylvania report by Danny Cullenward.
Cullenward, a senior fellow with the Kleinman Center for Energy Policy at the University of Pennsylvania, did estimate that a 65-cent increase could happen, but only if the price of LCFS credits reaches its maximum.
“I would not say that is a likely outcome,” Cullenward said.
Instead, in the short term, he expects credit prices to remain moderate, translating to a moderate and gradual price increase for consumers. In fact, Cullenward said data from the California Energy Commission shows that producers have already started passing on the anticipated cost of complying with updated standards.
So while LCFS will have an impact on prices there most likely won’t be a stark difference at the pump when changes take effect.
He said the proposed regulations will lower carbon intensity standards and could increase the price of credits more rapidly in the future.
“The cost impact is poised to grow substantially in the years ahead,” he said.
Colin Murphy, Associate Director of the Energy Futures Research Program at the UC Davis Institute of Transportation Studies, said he thinks the price of the LCFS is worth it.
“The evidence is pretty clear that the value of cleaner air, slowing climate change, new technology, all that means that the benefits far outweigh the cost,” Murphy said.
Still, the 65-cent increase that lawmakers like Jones have cautioned about, he said, is not a credible projection. He has estimated a price increase closer to nine cents per gallon, bringing the total cost of the LCFS for consumers to 17-23 cents per gallon.
“That’s not trivial,” Murphy said. “There are people for whom making day-to-day budgets is a struggle.”
Regardless of LCFS changes, the annual inflation adjustment of the excise tax rate on motor vehicle fuel will raise gas prices. The California Department of Tax and Fee Administration determines the new tax rate based on changes to the California Consumer Price Index.
This year the tax was raised 1.6 cents per gallon and consumers can expect to see that change at the pump Tuesday.
Complying with the low-carbon fuel standard
The LCFS regulations are set and updated by CARB. It aims to reduce greenhouse gas emissions by incentivizing the use of low-carbon and alternative transportation fuel. Its stated goal is to decrease the state’s reliance on petroleum.
CARB determines the “carbon intensity” of different fuels and compares them to an ever-lowering carbon intensity benchmark. Fuels that are below the allowed level of carbon intensity accrue credits while those above the level generate deficits. Producers that generate deficits must buy or earn an equal amount of credits.
The cost of credits determines how much compliance with the LCFS costs producers. Producers then decide how much of that cost they will pass off to consumers. Because of this cost pass-through, LCFS changes impact the price consumers see at the pump.
A bill, amended Monday would impose a maximum credit price of $70-75 based on the average price of credits on Jan. 1, 2025. The price cap would be adjusted each year according to the Consumer Price Index. This creates additional uncertainty about credit prices and makes it less likely that prices will significantly increase in the coming months, according to Cullenward.
“I wouldn’t expect an increase in retail price impacts this year unless LCFS credit prices start to increase again, which is possible but seems pretty unlikely given the political and legal uncertainty facing the program,” Cullenward said.
This story was originally published June 27, 2025 at 1:10 PM with the headline "Republicans say gas prices will go up 65 cents. Researchers aren’t as sure."
